To get the inside dope on rivals, firms will pay

CHICAGO - Kurt Neubauer doesn't wear disguises or sift through a company's trash hunting for secrets. But he is involved in corporate espionage.

Rather than calling himself a spy, however, Neubauer's job title is competitive intelligence analyst. Everything he does is legal and ethical, he says, and services of his kind increasingly are sought by midsize and large firms that spend an estimated $1 billion a year for inside dope, a figure predicted to grow tenfold by 2012.

Competitive intelligence analysts like Neubauer collect inside information by simply talking to people who work for or are associated with companies that their clients want to learn more about. At the top of the list, firms want to know what products or services are in their rivals' pipelines, so that they can plan countermoves.

Learning a few years ago that a competitor planned to launch a new line of men's personal care products to coincide with the Super Bowl, one client locked up as much retail counter space as possible for its products to throw a curve at its rival.

Neubauer's best sources are salespeople, he says, because they like to talk. One mission was to learn how many salespeople were employed by a target company, their sales strategies and how much they earned. Calling one salesman's home number, Neubauer got the wife instead. She was unhappy with her husband's employer, knew quite a bit about the company and was eager to talk.

"It's not a typical source we would go after," Neubauer said. "I stumbled upon her."

Neubauer, who works for Proactive Worldwide, based in Rolling Meadows, Ill., said he told the woman his real name and that of his employer, saying he sought information about sales practices. He didn't identify his client, a rival of the husband's employer.

"You're more likely to get a response to 'I hear you've got about 300 sales reps, is that right?' instead of asking how many people they have," he said.

The tight-lipped

Other than salespeople, engineers can also be good sources if you can understand the terminology they use, Neubauer said. But lawyers or accountants? Forget about it. "They're used to protecting information," he said. "It's best to avoid talking to them. I won't call them."

The Society of Competitive Intelligence Professionals (SCIP) estimates that among its 3,300 members, only a quarter work full time at CI, said John Fiegel, the group's interim executive director.

SCIP has a code of ethics and regularly holds educational forums to help practitioners improve their techniques, Fiegel said.

But he predicts that CI will become more widely embraced, as essential as market research, its much larger big brother. From his survey, Fuld estimates the top 1,000 U.S. companies now spend about $1 billion a year on CI and will raise that to $10 billion over the next five years.

Among the most aggressive users of competitive intelligence are pharmaceutical firms.

Most of the competitive intelligence gathering occurs at trade shows and scientific meetings through such benign techniques as just hanging out at a rival firm's trade show exhibit booth, listening to conversations and jotting down useful tidbits, said Dr. Douglas Melnick, a California physician.

Craig McHenry, director of competitor insights for Wyeth, the Philadelphia-based pharmaceutical firm, said the way clinical tests are structured provides clues about how a drugmaker may position a new product.

"We look at which patients are included in a trial and which are excluded," McHenry said. "That can suggest the indications for the product they hope to get on their label."

Wyeth sometimes notices competitors watching them, he said.